Marching Faster Payments into the Spring and Beyond


Reed Luhtanen, Executive Director, FPC

As the saying goes, “March winds and April showers bring forth May flowers.” March sets the foundation for the spring months to come. At the FPC, we used the month of March and our 2023 Spring Member Meeting to discuss new ideas to further activities that will advance faster payments. 

The Spring Meeting, which took place a couple weeks ago in Kansas City, gave us an opportunity to address some of the tougher challenges facing faster payments today, like interoperability, use cases and fraud. In our opening session, The Next Step for Faster Payments: Interoperability, we discussed the fact that once FedNow℠ launches, the U.S. will have two separate real-time systems that may not interoperate, which panelists agreed could create complexity. And while it is not necessary for similar systems to interoperate and be successful, panelists suggested there is an unstated expectation that similar systems will, and that remains a consideration for the FPC to address. Also, it is what the industry wants. Based on previous Faster Payments Barometer findings, 96 percent of industry participants believe achieving interoperability is somewhat to very important. And it could be what the industry needs. As Elizabeth McQuerry, Partner at Glenbrook, and moderator of the session pointed out, “In other markets when there’s been competing systems and then they move to interoperate, typically the volume increases for everyone, because the endpoints are bigger. So, hopefully, here in the U.S., we get off to solid start and continue moving in the right direction.”

One way to continue increasing volume is through the identification and adoption of new use cases. In our Business End-Users Mega Use Cases session, we heard directly from merchants, like Kroger and Walmart, on how they are considering using faster payments and what else needs to happen to make desired use cases come to life. For merchants, faster payments are important, as they want to provide customers with the options to pay the way they want. And they are interested in exploring faster payments for business-to-business transactions and other processes such as instant refunds. According to Matt Howarter, Senior Director Payments Services at Walmart, “Not having immediate refund capabilities for consumers is unacceptable. Over 45 percent of calls to our call center are ‘Where is my refund?’ Faster payments present the perfect opportunity to be able to leverage the technology to improve that customer experience.” Regardless of use case, both Kroger and Walmart agree that it will be very important to get the user experience right. It needs to be consistent, and the consistency needs to be replicated across merchants. And security will be important. If security is not sound, it could be a significant deterrent to use.

That’s why we also explored the topic of security and fraud in the Faster Payments Fraud Trends and Mitigation Strategies session. In this session, panelists pointed out that overall, payments fraud is on the rise across the globe, as fraudsters are now attacking the weakest link in the payments system, the consumer. Panelists agreed that to support consumers, financial services firms need to collaborate and employ mitigation efforts and a layered approach that looks at transactions from the point of authentication down to funds leaving the institution. As Liam Cooney, VP, Global Product Development, Cyber and Intelligence Solutions at Mastercard, said, “Increased collaboration across the industry is an imperative to combat scams.  Otherwise, customers will continue to get defrauded, and people will lose trust in the payments system.”

And these topics scratch the surface of the work we’re uncovering. The discussions, ideas, and solutions we are exploring and sharing today will influence the future of faster payments. As an organization, we’re laying the foundation, and with the continued help of Members and other industry stakeholders, we’ll help ensure faster payments flourish in the months to come.

 

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